India’s New GST Track and Trace Mechanism: A Comprehensive Guide

The Indian government is set to implement a new track and trace mechanism under the Goods and Services Tax (GST) regime. This initiative is aimed at reducing tax evasion, particularly in the trade of certain specified commodities. The changes will significantly affect businesses engaged in these sectors. Key provisions from the Finance Act 2025, including Section 148A and Section 122B, outline this new framework. A uniqueness to this system is the introduction of Unique Identification Marking (UIM) for goods.

Understanding the Track and Trace Mechanism

How it Works

The new system functions by assigning a unique identification mark to specified commodities. This mark assists in tracking goods throughout the supply chain. Once a UIM is generated and affixed, it becomes essential for each item as it moves from one business to another.

Flow Chart of UIM Functionality

UIM Generation: Unique ID is created for a product.

Affixing UIM: The mark is applied to the product and its packaging.

Tracking: As goods are transported, the government can trace their movement using the UIM.

Data Access: Information regarding the product is stored electronically for reporting.

Targeted Commodities

The government will notify specific commodities for this mechanism. Goods likely to fall under this new regulation include:

Cement

Iron

Steel

Pan masala

These sectors have shown significant levels of tax evasion, prompting the need for such measures.

Legal Framework

Section 148A within the Finance Act 2025 empowers the government to enforce this track and trace mechanism for specified commodities. This provision enables better monitoring of goods to mitigate tax evasion.

The Role of Unique Identification Marking (UIM)

UIM Generation and Application

UIMs will be generated and must be affixed to both the goods and their packaging. This mark will display essential information such as:

Product type

Quantity

Origin details

Data Storage and Access

The information linked to each UIM will be securely stored electronically. An online portal will provide access to this data, creating a reliable database for tracking goods.

Benefits for Businesses and the Government

The introduction of UIMs benefits both the government and businesses:

For Businesses: Enhances operational efficiency and minimizes risks related to tax compliance.

For Government: Increases tax revenue and reduces the likelihood of evasion.

Compliance and Reporting Requirements for Businesses

Affixing UIMs

Businesses must follow clear steps to affix UIMs correctly to their goods and packaging. Each UIM needs to be visibly placed and adhere to prescribed guidelines.

Online Portal Reporting

Businesses must report UIM data through the government’s online portal. This process includes submitting:

UIM details

Product information

Delivery details

Machinery Information Reporting

Companies must provide information about the machinery used to manufacture the goods. This submission is similar to the requirements seen in the SRM forms.

Penalties for Non-Compliance

Violation of Provisions

Non-compliance with the new regulations can lead to severe penalties under Section 122 Capital B. Businesses need to understand the implications fully.

Severity of Penalties

Fines associated with violations can be substantial, impacting a company’s finances severely.

Strategies for Avoiding Penalties

To ensure full compliance:

Regularly train employees on new provisions.

Maintain accurate records and documentation.

Utilize the online portal efficiently for reporting.

Conclusion

The new GST track and trace mechanism represents a significant shift in how goods will be monitored in India. Compliance with these regulations is crucial to avoid penalties. Businesses are encouraged to stay informed and consult with GST professionals to navigate these changes effectively. Engaging in these practices will ultimately lead to a smoother transition into the newly structured GST framework.

Youtube video Link-https://youtu.be/YmoA0w9uihQ?si=p_UREwhYuRaEchE3

GST FULL COURSE 2025 LIVE BATCH –https://web.gstplatform.com/courses

Also read our other related articles:https://gstplatform.com/wp-admin/post.php?post=2789&action=edit